I am not a defender of the excessive bonus culture, especially when traders are risking the banks’ cash and not their own. Nor would I seek to excuse the irresponsible management that has occurred, particularly by the top executives of some of our banks. I am also concerned that there has been a decline in the integrity of the City (although not universally) since Big Bang.
But in the wake of the banking crisis there have been too many misguided comments on the value of the City to the British economy. In his recent Bruges Group publication, Professor Tim Congdon has rightly written up and quantified the value of the City to the British economy. The “bottom line” is that in 2007 British “business exports” earned £120 billion – a major contribution to paying for all the imports from Asia.
While the City is the biggest component, such business exports also include lawyers, consultants, advertising and marketing agencies and other sophisticated services. It is wholly appropriate for a mature economy such as the UK to earn its keep in the world by its brains, rather than its brawn – which cannot compete with the low wages of Asia. The sophisticated banking services which Lord Turner opined were of little value to the UK economy earned for the UK substantial international revenues, thus indirectly benefiting the UK economy. Read in full on ConservativeHome.